10 March 2013

U.S. Could Be Courting Trouble In Europe

With few exceptions, such as Germany, closer U.S. economic ties to Europe would be a recipe for American decline.

By Joel Kotkin

One of the most fascinating aspects of Barack Obama's presidency
stems not so much from his racial background, but his status as
America's first clearly post-European, anti-colonialist leader. Yet,
after announcing his historic "pivot" to vibrant Asia, the president,
the son of an anti-British Kenyan activist, recently announced as his
latest foreign policy initiative an economic alliance with, of all
places, a declining, and increasingly decadent, Europe.

Some analysts, such as Walter Russell Mead, suggest the possible "ratting out"
of the new Asia focus could constitute "a mistake of historic
proportions." In East Asia, leaders, from Vietnam and Singapore to
Japan, have been counting on a strong U.S. presence to ward off Chinese
hegemony in the region. The idea of a reduced naval presence and a
weakening commitment to allies would undermine our influence in this
increasingly critical economic region.

A
woman cleans the tables outside a deserted bar in Pamplona northern
Spain on Friday, March 8, 2013. Spain is suffering from two years of
recession, harsh austerity programs, sky-high unemployment and an
unstable footing on the world's markets.

At the same time, the president's desire to integrate our economies
more closely to that of Europe reflects a longtime prejudice within the
Democratic Party favorable to the old Continent. The notion of a new
trade tie to the European Union set longtime Eastern policy types, such
as former Bill Clinton aide and onetime Woodrow Wilson School head
Anne-Marie Slaughter into rhapsodies about an emerging new "Atlantic Century."Vice President Joe Biden, for his part, told a recent Munich security
conference that Europe represents "the cornerstone of our engagement
with the rest of the world."

This is delusional, to say the least. Republicans have their faults,
but at least they know how to tell historic time. In contrast, largely
Democratic Europhiles simply want to relive the glorious past, and
consume a legacy of affluence. And to be sure, generally it's more
pleasant to attend – as long as someone is paying the bill – a
conference in London, Paris or Zurich than Beijing, Mumbai or Mexico
City. Europe, as we know from the debates over compensation of EU bureaucrats, knows how to treat functionaries with the comfort to which they easily can become accustomed.

Pumping for greater Euro-ties seems almost insane under current
conditions. The Continent's unemployment rate, nearly 12 percent among
the 17 EU member countries, is already at record levels, and its younger generation suffers unemployment approaching 30 percent or higher in at least five EU countries, including Greece, Spain and France. In Portugal,
2 percent of the population has migrated just in the past two years,
not only to Northern Europe but, amazingly, also to Portugal's booming
former African colonies.

This does not seem to be setting up the prime conditions for Ms.
Slaughter's imagined new "Atlantic Century." Although North America
retains the resources, demographics and innovative culture to compete
with Asia and other rising powers, Europe is in a notably downward
trajectory. Its share of the world economy has plummeted from nearly 40
percent in 1900 to 27 percent today and continues to shrink rapidly. By
2050, not only the United States, but China and the rest of the
developing world, according to the European Commission, will have surpassed the total of the 27 countries in the EU.

One has to be a cockeyed optimist not to see that the long-term
prognosis, even without the current euro crisis, is not good.
Manufacturing, long a Continental bastion, is weak and falling behind
that of the U.S. as well as Asia. German engineering may still be
first-class, but much of the production and design will be moving to
Mexico, the U.S., Latin America and Asia.

Energy may prove a particular vulnerability. Although the region has
shale and other energy resources, greens are far more powerful in Europe
than in America and hostile to the hydraulic fracking that has created
the current U.S. boom in oil and gas. The combination of radical green
policies favoring expensive, often unreliable renewables, as well the
shuttering of the Continent's once-strong nuclear industries, are
creating both high prices and wobbly reliability of electricity
supplies. (Ironically, the reluctance to maintain nuclear power and
oppose fracking for natural gashas led to a risein greenhouse gas emissions and even some increased use of coal.) Tulane's Eric Smith suggests
many of Germany's manufacturing powers are intensifying efforts to
shift operations, notably to the southern United States, for cheap
electricity and lower overall costs.

Demographics, however, may be Europe's weakest suit.
Although East Asia is now experiencing low fertility, Europe has been
demographically stagnant for at least a generation longer. By 2050, Europe's workforceis expected to decline by 25 percent from 2000 levels; the U.S. is expected to see expansion of upward of 40 percent.

This phenomenon threatens Europe's lone serious economic power,
Germany. The country now produces fewer children than in 1900. Given the
expansive welfare state, the fiscal burdens being faced in Germany and
other EU countries will dwarf those of the United States; by 2050
Germany will have nearly twice as many retirees per active worker as
America.

Yet remarkably, for all its manifest failings, Europe remains a Mecca
and role model for many American progressives, like Ms. Slaughter. The
past decade has seen the publication of a spate of books,
such as Jeremy Rifkin's "The European Dream" and Steven Hill's
"Europe's Promise," that see Europe's regulation state and "soft power"
an alluring alternative to America. Some hail the EU as the prototype of
a benign "new kind of empire" based on culture and pacifism.

If so, it's an empire rapidly hurtling into its dotage. The great European historian Walter Lacquer
has pointed out that such optimism about the Continent becoming "united
and prosperous" is likely "misplaced." In policy terms, for the U.S. to
follow Europe's model is an almost sure recipe for our own decline.
Even the usually pro-free-trade Wall Street Journal is concerned
that any attempt to "harmonize" American policies with those of the
"European model" will simply expand government power and bureaucratic
hegemony.

To be sure, there remain parts of Europe, particularly in the
Northern rim, that are doing better. These countries – the Netherlands,
Scandinavia and Germany – have enacted significant labor market reforms,
retain some strong industries and have tried to be responsible
fiscally. If they broke off from the EU and set up a modern-day
Hanseatic League, it may make sense for us to embrace stronger ties with
them. But that can't be said of an alliance with the weak sisters of
the EU's southern and eastern fringes, or even dirigiste state-dominated France.

In reality, the EU will never become a giant Sweden. Scandinavia
possesses a unique history, shaped by massive outmigration in the past
century and a largely homogeneous population; many of these countries
possess great natural resources, such as oil, iron ore or
hydroelectricity. In contrast, the eastern edge of the zone contains
some of the most depopulating parts of the planet, as people seek
opportunities in the more economically viable North. Thecomic political economy of Italy, thepolitical violence of Greeceand the mass disenchantmentof Spain presage a European future that contrasts greatly with the relative prosperity and order of the North.

None of this suggests that, if the political strings are not wound
too tight, that a free-trading arrangement with Europe may prove useful.
But if an agreement becomes a wedge for accelerating the adoption of
Euro-style policies, it could allow us to squander an opportunity to
maintain our pre-eminence in the post-colonial, and
post-European-centered, world.

Register opinion columnist Joel Kotkin is a Distinguished
Presidential Fellow in Urban Futures at Chapman University. He is the
executive editor of www.newgeography.com.